Posts Tagged ‘market’

What is the proper role of government with regard to the health care of its citizens? How should costs be allocated? These are questions that are still up in the air in the USA, but how these questions are addressed still applies everywhere. The Republicans appear to have painted themselves into a corner on this subject, while the Democrat-imposed Obamacare is collapsing from its own defects. This legislation was deeply flawed and fundamentally unjust insofar as it expanded coverage for some uninsured people, largely by expanding Medicaid, while otherwise imposing steep additional costs on other individuals in a haphazard fashion. But the Republicans are the governing party now and are stuck with having to come up with solutions they have not adequately provided. They should know by now that it is virtually impossible to get rid of a benefit once it has been established, and the plan passed by the House is going nowhere in the Senate and fails to provide the fundamental overhaul they promised.

There is a desperate need to rationalize the American health care system by going back to the drawing board and starting from scratch. Republicans first need to concede that everyone ought to have adequate health care, giving that to the Democrats, who might then be brought on board. But this does not necessarily mean that health care should be provided by the government. Nor should it be provided because it is a “right;” it is rather a benefit. Why then should the state in some fashion underwrite such a benefit?

The short answer is that a developed society can afford to, and we must increasingly come to grips with the consequences of technological change, which is far more salient than “globalization” in causing economic disruption. Given that inequality is an inevitable consequence of a truly free society, those who lack higher skills and who are left behind by the consequences of automation, AI, and other developments- something that can happen to anyone, need to provide a basic level of support. If growth and economic dislocation eventually benefit everyone, then those who have disproportionately suffered the consequences ought to be provided with some level of adjustment. This is a different population than the poor, who already get everything for free. It is a population we want to prevent from falling into the ranks of the poor. As society develops and grows richer overall, it is reasonable to provide basics for everyone through some mechanism that does not overly burden everyone else.

The way to do this is to resolve to get the government completely out of the health care business and let market forces do what they do best- rationalize the distribution of goods and services. The state would instead provide a graduated insurance stipend to those who cannot afford it, who would then be able to purchase whatever health care they want or need. For this to work the government would no longer provide any other services directly or indirectly; no more mandates, no more policies, just a cash benefit and there would no longer are any pre-existing conditions. Since everyone is obligated to pay taxes, insurance and medical costs would be deductible, and medical savings exempt from taxation, but anyone who fails to purchase coverage would be charged with the cost of providing a policy for them, which would at least cover catastrophic circumstances, which otherwise would be passed on to everyone else. This does sound like the Obamacare tax but you cannot have universal health care without universal participation and no one is here being compelled to do anything.

This is not socialism, which is unworkable. Socialism would be government control of all health care, and hence ownership of the system. This is the opposite of that. Government is completely removed from any operational role and only would only maintain the principle that everyone be covered, by providing direct cash transfers where needed. This would dismantle the administrative state, save billions, and allow a rational system of costs and services to develop, leading to a reduction in overall expenses. There are many details to be worked out and this is preferred only as a roadmap. There are only two fundamental principles that must be adhered to: that everyone be covered and that the government gets out of the health care business.